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Apple’s Growth in Chinese Market

Research Paper (postgraduate) 2012 75 Pages

Business economics - Trade and Distribution

Excerpt

Table of Contents

Acknowledgements

Abstract

Chapter one
1 Introduction
1.1 Background to the study
1.2 Apple Incorporated
1.3 Research questions
1.4 Objectives of the study
1.5 Why this topic was chosen
1.6 Approach and rationale
1.7 Structure of the dissertation

Chapter Two
2 Literature review.
2.1 Apple Inc. in china
2.2 Distribution channels of Apple Inc
2.3 Supply chain
2.4 Challenges facing Apple Inc. in china and their solutions
2.5 MNC business strategies
2.5.1 Global strategies
2.5.2 Localization strategies
2.5.3 Transnational strategy
2.5.4 International strategy
2.6 Marketing strategies
2.7 Porter’s competitive strategy
2.7.1 Cost Leadership
2.7.2 Differentiation Strategy
2.7.3 Focus Strategy
2.8 Ansoff  Growth Matrix
2.8.1 Market Penetration
2.8.2 Market development strategy
2.8.3 Product development
2.8.4 Diversification
2.9 Apple Inc. business strategy
2.10 Marketing strategies of Apple Inc. in China
2.11 Apple Inc. marketing mix
2.11.1 Products
2.11.2 Price
Table 1: price and product strategies
2.11.3 Promotion
2.11.4 Placement

Chapter Three
3 Research methodology
3.1 Introduction
3.2 General review of research design
3.3 Sampling
3.4 Data collection techniques
3.4.1 Primary data
3.4.2 Secondary data
3.5 Data analysis
3.6 Presentation of data
3.7 Reliability and validity
3.8 Limitations of the study

Chapter Four
4 Results and discussion
4.1 Introduction
4.2 Results
4.3 Demographic characteristics of respondents
Table 2: Age of respondents
Table 3: Sex of respondents
Table 4: What is your occupation?
4.4 Purchasing Apple Inc. technology in china
Table 5: Do you know about Apple Inc. products?
Table 6 : How did you know about Apple Inc. products?
Table 7: To what extent do you like the Apple Inc. products?
Table 8: How many of the Apple Inc. products do you have?
Table 9: Indicate the product you own
Table 10: Why did you prefer to purchase Apple Inc. product?
Table 11: You have been using the Apple Inc. products for what duration?
4.5 Purchasing technology
Table 12: Which brand do you plan to purchase soon?
4.6 Important differentiation attributes
Table 13: How important is quality when purchasing technology products?
Table 14: How important is packaging when purchasing technology products?
Table 15: How important is price when purchasing technology products?
Table 16: How important is popularity when purchasing technology products?
Table 17: How important is availability when purchasing technology products?
Table 18:  What is your opinion about Apple Inc. prices?
Table 19: In your opinion Apple Inc. is successful because of
Table 20: Have you been to Apple Inc. retail store?

Chapter Five
5 Discussion and conclusion
5.2 Conclusion
5.3 Recommendation

References

Appendix 1
Research questionnaire

Appendix 2
Statistics

List of Figures:

Figure 1: Top 5 global internet users by country in 2010

Figure 2: Top 5 global mobile phone users by country in 2010

Figure 3: Internet users in china

Figure 4: mobile phones users in china

Figure 5: Apple Inc. revenue by regions

Figure 6: Market share of Apple Inc. in china

Figure 7: The distribution channels of Apple Inc

Figure 8: supply china of Apple Inc.

Figure 9: Apple Inc. market coverage

Figure 10: Age of respondents

Figure 11: Sex of respondents

Figure 12: What is your occupation?

Figure 13: Do you know about Apple Inc. products?

Figure 14 : How did you know about Apple Inc. products?

Figure 15: To what extent do you like the Apple Inc. products?

Figure 16: How many of the Apple Inc. products do you have?

Figure 17: Indicate the product you own

Figure 18: Why did you prefer to purchase Apple Inc. product?

Figure 19: You have been using the Apple Inc. products for what duration?

Figure 20: Which brand do you plan to purchase soon?

Figure 21: How important is quality when purchasing technology products?

Figure 22: How important is packaging when purchasing technology products?

Figure 23: How important is price when purchasing technology products?

Figure 24:  How important is popularity when purchasing technology products?

Figure 25: How important is availability when purchasing technology products?

Figure 26: What is your opinion about Apple Inc. prices?

Figure 27: In your opinion Apple Inc. is successful because of

Figure 28: Have you been to Apple Inc. retail store?

List of Tables:

Table 1: price and product strategies  32

Table 2: Age of respondents  40

Table 3: Sex of respondents  41

Table 4: What is your occupation?  42

Table 5: Do you know about Apple Inc. products?  43

Table 6 : How did you know about Apple Inc. products?  44

Table 7: To what extent do you like the Apple Inc. products?  45

Table 8: How many of the Apple Inc. products do you have?  46

Table 9: Indicate the product you own 47

Table 10: Why did you prefer to purchase Apple Inc. product?  48

Table 11: You have been using the Apple Inc. products for what duration?  49

Table 12: Which brand do you plan to purchase soon?  50

Table 13: How important is quality when purchasing technology products?  51

Table 14: How important is packaging when purchasing technology products?  52

Table 15: How important is price when purchasing technology products?  52

Table 16: How important is popularity when purchasing technology products?  54

Table 17: How important is availability when purchasing technology products?  55

Table 18:  What is your opinion about Apple Inc. prices?  55

Table 19: In your opinion Apple Inc. is successful because of  57

Table 20: Have you been to Apple Inc. retail store?  58

Chapter one

1 Introduction

1.1 Background to the study

The information, communication and technology industry in china covers dynamic and broad range of services and products from information technology consulting services, software, hardware to telecommunication equipments (Chen, R., 2004). Moreover, Barney and Hesterly (2006) notes that there are over 859 million people in china using mobile phones and another 457 million online population, the largest in the world for the two categories, nevertheless, piracy culture makes it challenging for Apple Inc. and other western firms to make considerable profits in china. Chinese internet users are double US internet users and followed closely by Japan. When compared to India, the internet users in the people’s republic of china are 88 million more than Indian internet users.

Figure 1: Top 5 global internet users by country in 2010

illustration not visible in this excerpt

Source: Circuits Assembly (2007)

On the other hand, the mobile phone users in china double the users in Russia and USA.

Figure 2: Top 5 global mobile phone users by country in 2010

illustration not visible in this excerpt

Source: Circuits Assembly (2007)

According to Barney (1991), the growth drivers for mobile phone usage and internet use in china is the increased GDP growth rate in china for the past 7 years which spur development in information communication technology industry in china. Consequently, internet users in china tripled from 2006 to 2010 with 2010 indicating 19 percent increase at 34 percent penetration rate up from 29 percent in 2009.

1.2 Apple Incorporated

Apple Incorporated, an American firm, produces computer software, personal computers, iWorks, OS X, iLife and other technological electronics (Apple Inc., 2003). The corporation leads in digital music market with its iTunes and iPods and has customers in several countries including China. By reinventing mobile phones through its App store, magical iPad and iPhone, Apple Inc. has been considered the most innovative company that provides top technology in Chinese electronics market (Barney, 2007). The products of Apple Inc. are manufactured to enable their Chinese customers to have easier life by combining various technologies. In 2010, Microsoft was surpassed by Apple Inc. which became the biggest company in the globe. The company established good reputation among its customers in china because it has ever changing and unique electronics ideas. Globally, Apple Inc. has about 49,400 employees working in finance, marketing, engineering, facilities, retail, legal rights, operations and sales positions. In addition, Apple Inc. provides a number of opportunities to its employees in order to be the best company with corporate social responsibilities towards employees.

Since its establishment by Steve Wozniak, Steve Jobs and Ron Wayne in 1976, Apple Inc. invented electronic products that revolutionized customer needs for digital technology products and succeeded where a number of multinational corporations (Bout, Chang and Lin, 2004). For instance, the latest devices like iPad outperformed other portable like Notebook. By leveraging technology that is difficult to imitate and strong brand equity, Apple Inc is the most well-liked electronics company in china. Moreover, technology at Apple Inc. is boosted through cooperation with other electronic firms in china like Foxcom.

In addition, Bout, Chang and Lin (2004) reports that the company offers some of its products through leading mobile carrier in china- China Mobile Ltd which is a state corporation thus giving Apple Inc. the access to millions of consumers in the uncertain Chinese market. This confirms the long use of Chinese factories by Apple Inc. to assemble the devices. However, the company began to target the growing Chinese consumer class and consequently opened retail stores in major cities in china and marketed/advertised all its products including iPad tablets, iPhone, Mac computers and others.

Barney (2006) indicate that china for the past 10 years has become the world’s top consumer market due to its large size, high population and fast economic development which outperformed Japan in 2009 to become the second after US and consequently surpassed United States as the biggest automobile market in the world in the same year. As a result, Apple Inc. regards china as its fastest growing country in sales despite having only four major retail stores by 2009 which makes up below 2 percent of Apple Inc. retail stores globally. Each day, over 40,000 visitors stream through the companies four stores. Moreover, the revenues for Apple Inc. from the greater china with Taiwan and Hong Kong inclusive almost quadrupled to USD $ 5 billion although the greater china region accounts for only 10 percent of Apple Inc.’s overall revenue. Moreover, the sales in the greater china outpaced a Chinese PC manufacturer Lenovo (Johnson, Scholes and Whittington, 2006). Apple Inc. also plans to open a number of stores throughout china and iPhone sales were impressive generating over US$8.8bn revenues. Therefore, Apple Inc. is popular in china and its products are accepted by Chinese.

Primary Objective

This dissertation will attempt to examine Apple Inc. growth in Chinese market and understand how the company changed Chinese customers’ perception despite stiff competition to become very popular and successful in china.

1.3 Research questions

What are the marketing strategies of Apple Inc.?
1. What are the challenges facing Apple Inc. in china?
2. What are the perceptions of Chinese consumers on Apple Inc. products?
3. What are the demographics characteristics of Apple Inc. consumers?
4. Why do Chinese prefer to purchase Apple Inc. products?
5. Which companies are the main competitors of Apple Inc. in china?
6. How can the marketing strategies of Apple Inc. be improved?

1.4 Objectives of the study

The specific objectives include:

1. To present Chinese consumer perception about Apple Inc. products
2. To determine the target market of Apple Inc.
3. Assess challenges facing Apple incorporated in china
4. To investigate how marketing strategies of Apple Inc. can be improved

1.5 Why this topic was chosen

Investigating Apple Inc.’s growth in the Chinese market is very important to understand how foreign companies venture into the stiff Chinese market and become successful. Consequently, the findings of this study will be very important to domestic Chinese companies to improve their marketing strategies and change the perceptions of Chinese consumers towards them. Moreover, the researcher has had interest in studying Apple Inc.’s growth since the company ventured into Chinese market recently yet many people own their products.

1.6 Approach and rationale

Both qualitative and quantitative approaches used in this study in order to establish why Apple Inc. is so popular and successful in china. Consequently, data was collected from consumers in china to understand the marketing strategies of Apple Inc. In addition; secondary data was collected to complement the primary data thus increasing reliability and validity of the research findings.

1.7 Structure of the dissertation

The rest of this dissertation is structured as follows:

Chapter 2

Chapter 2 describes the marketing strategies and methods used by Apple incorporated and how the company has grown in the Chinese market. The marketing mix, distribution channels and supply chain of Apple Inc. have also been discussed including the challenges faced by the company in the Chinese market.

Chapter 3

Chapter three outlines the research methodology and the justifications for the methods. In addition, the sources of data, statistical analysis, limitations of the study and the sampling techniques have also been illustrated.

Chapter 4

The chapter presents the results of the study and discusses these findings based on the research objectives and research questions. The results have been presented in tables, figures in order to increase understanding and enhance interpretations of the findings.

Chapter 5

Chapter 5 provides conclusion and recommendations of the study.

Chapter Two

2 Literature review

As the economy of china continues to grow and the number of millionaires and rich people in china increase, it is expected that most of them will differentiate themselves from the others through owning the expensive products. Generally, china has been considered by a number of researchers as a relatively untapped and big opportunity for the electronics companies especially Apple Inc. since its mobile phone and internet users have been increasing steadily (Alpert and Kamins, 2005). As indicated in figure 3, internet users in china were 137 million in 2006 but increased to 457 by 2010.

Figure 3: Internet users in china

illustration not visible in this excerpt

Source: Deffree (2007)

On the other hand, the mobile phone users in china increased to 859 million in 2010 from 440 million in 2006.

Figure 4: mobile phones users in china

illustration not visible in this excerpt

Source: Deffree (2007)

2.1 Apple Inc. in china

Despite the popularity of Apple Inc. in china, it has a small proportion in the computer market, accounting for just 8 percent (Jain, 2007). However, this may be attributed to its short time in the Chinese market since it entered Chinese market in 2009 October. Consequently, this high traffic in Chinese stores contributes the highest revenue and highest traffic for any Apple Inc. stores globally.

The sales performance between 2008 and 2010 was high with net income increasing by 34.6 percent in 2009 compared to 2008, in 2010, net income increased by 70.2 percent compared to 2009 (Jin and Zedtwitz, 2008). Moreover, the net sales of Apple Inc. for FY ended September 2011 were $12.5 billion which accounts for approximately 11.6 percent of Apple Inc. total revenue. Chinese consumers were easily attracted by the technological devices like iPhone, iPad and iPod likewise to consumers in other countries although there was increased interest in china when compared to these other countries. However, analysis of Apple Inc. revenues reveals that major markets for Apple Inc. are in Americas and Europe.

Figure 5: Apple Inc. revenue by regions

illustration not visible in this excerpt

Source: Jin and Zedtwitz (2008)

These financial data of Apple Inc. indicates an increasing sales trend. Apple Inc.’s technological strength is big since it focuses on development and research coupled with powerful innovation ability. It owns an operating system which is difficult to imitate. The position of Apple Inc. in china is indicated below.

Figure 6: Market share of Apple Inc. in china

illustration not visible in this excerpt

Source Low (2005)

2.2 Distribution channels of Apple Inc.

Apple Inc. uses two main distribution channels in reaching its customers as reported by Low (2005). These include direct and indirect distribution channels. According to Low (2005) direct distribution channel of the company occurs through established retail stores at various locations, displaying products and providing support and information to consumers directly before and after purchasing the products. On the other hand, Segal-Horn and Faulkner (1999) defines indirect distribution channels as involving intermediary organizations and supplies, provides financial services for its retailers and increasing buying from customers. Moreover, Apple Inc. reduces costs of transport by assessing and operating their warehouse near intermediaries. The distribution channels of Apple Inc. are further illustrated in figure 7.

Figure 7: The distribution channels of Apple Inc

illustration not visible in this excerpt

Source: Hong and Tan (2007),

2.3 Supply chain

According to Tansuhaj, Hong and Tan (2007), the main Apple Inc. supplies are found in Asia yet most of Apple Inc. customers are found in US and Europe. Consequently, Tansuhaj, Hong and Tan (2007), cautions that this may negatively affect delivery due to logistics and cost of delivery. In addition, a number of Apple Inc. supplies have issues with environment since their activities are not environmentally friendly. Some of the biggest supplies of Apple Inc. are the company’s biggest rivals, for instance, Samsung supplies Apple Inc. with most of the materials they need and at the same time it is their main competitor in the market.

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Details

Pages
75
Year
2012
ISBN (eBook)
9783656610397
ISBN (Book)
9783656610373
File size
1 MB
Language
English
Catalog Number
v269805
Institution / College
King`s College London
Grade
B
Tags
apple’s growth chinese market

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Title: Apple’s Growth in Chinese Market